Using the False Claims Act to Fight Fraud

Our team is proud to partner with whistleblowers to fight back against health care fraud and other forms of government contracts fraud.  When a case involves fraud on the federal government, the False Claims Act is the primary tool that private citizens can use to pursue these claims.  While we often talk about specific issues of fraud on this blog, it is also important to periodically take a step back and examine this important piece of legislation more generally.  In this post, our False Claims Act lawyer does just that.

An Overview and the History of the False Claims Act

lawbooksThe False Claims Act (“FCA” or “the Act”) is a series of statutes, with two of the most important pieces found at 31 U.S.C. 3729,  which defines a false claim, and 31 U.S.C. 3730,  which creates a cause of action.  Passed during the Civil War Era amid concerns about contractors defrauding the Union Army, the FCA was largely forgotten until the mid-1980s and has gone through several major revisions in the past few decades.  Now, it stands as the primary tool for fighting a range of frauds from a manufacturer providing inferior goods pursuant to a military contract to a medical provider billing Medicare for services that were not medically necessary to any other form of government contract fraud.

31 U.S.C. 3729: Liability & Damages

Liability under the Act is defined primarily by Section 3729.  In broad terms, the statute defines a violation of the Act as knowingly submitting (or causing another to submit) a false claim to the government or knowingly creating a false record/statement in order to get the government to pay an improper claim.  As discussed in a recent post on this blog, there is also a prohibition on “reverse false claims” which involves failing to pay money owed to the government; this includes keeping money that the person/entity received but knows should not have been paid by the government (i.e. money that should be paid back).

Damages under the Act are also detailed in Section 3729.  Language at the end of subsection (a)(1) explains that a party that violates the Act must pay three times the amount of damages caused by the fraud.  This is in addition to a civil penalty of between $5,500 and $11,000 for each violation.  The Act does provide that treble damages can be reduced to double damages if the defendant voluntarily discloses the fraud within 30 days.   To qualify, the disclosure must be made before any legal action is filed regarding the violation and before the defendant knows of any investigation into the violation.

31 U.S.C. 3730: The Right to Sue

Also of high importance is Section 3730.  In addition to allowing the government to bring a claim for violation of the Act, Subsection 3730(b) contains a qui tam provision which allows a private party to bring a claim on the government’s behalf.  When such a claim is filed, the government must decide whether to intervene in the action, essentially taking over the case, or allow the private party (the “realtor” or, more colloquially, “whistleblower”) to proceed with the action.  When an action filed by a private realtor leads to a recovery by the government, either via a settlement or a verdict, the realtor is entitled to a portion of the money recovered.  Under most circumstances, the successful realtor receives 15 to 25% of the recovered money if the government intervenes in the case and 25 to 30% if the government does not intervene.

A Whistleblower’s Law Firm

Our firm is proud to partner with whistleblowers to help them navigate the complex waters of a False Claims Act case.  We welcome calls from anyone who believes he/she has knowledge of health care fraud, government contract fraud, or other fraud in violation of the FCA.

See Related Blog Posts:

Record Recoveries in False Claims Act Suits in 2014, Whistleblowers’ Firm Looks to Continue Trend in 2015

The False Claims Act: From Shoddy Civil War Uniforms to Costly Defense Contracts in 2014

(Image by Eric E. Johnson)